Texas (USA): Towards the end of Q1 2024, ortho-xylene (o-xylene) prices have been steadily rising in the US market. This surge can be attributed to the upward momentum of crude oil prices and production disruptions, which have fuelled relentless hikes throughout the month. While higher prices have stimulated increased buying activity, it has primarily been for replenishment purposes rather than stockpiling, owing to steady downstream demand. Several market participants anticipate that o-xylene prices might continue to rise early in the second quarter of 2024, as energy prices coupled with feedstock costs are expected to increase within the market. The anticipated recovery in domestic demand in the coming months may further contribute to the upward trend in prices.

Market reports indicate that support from feedstock mixed xylene has been significant for o-xylene prices, as they settled on the higher end during the month. This has contributed to the upward trajectory of o-xylene prices in the domestic market. Additionally, oil prices rebounded after a previous decline, with U.S. crude and gasoline inventories decreasing, supported by signs that the U.S. Federal Reserve may maintain higher interest rates for longer, which could dampen future fuel demand outlook. Crude inventories in the U.S., the world's largest oil consumer, dropped for the second consecutive week, as reported by the U.S. Energy Information Administration (EIA). Furthermore, stockpiles unexpectedly declined by 2 million barrels to 445 million barrels in the week ending March 15. Taking advantage of surging oil prices, most o-xylene producers initiated a renewed increase of $30 per metric ton during March 2024.

Moreover, the availability of o-xylene has been limited to meet existing demand from downstream industries. Consequently, manufacturing firms have begun to increase their operating rates to maintain market equilibrium. Additionally, the U.S. Manufacturing Purchasing Managers' Index settled at 50.3 in March, compared to the previous month, marking the first expansion in the manufacturing sector after 16 months of contraction. On the other hand, market reports indicate that U.S. businesses are grappling with global shipping challenges in the Red Sea and Panama Canal, a new labour dispute at U.S. ports, and a recent collision at the Francis Scott Key Bridge, which is currently disrupting logistics and freight movement in the immediate regions, thereby impacting o-xylene supply.

Furthermore, domestic demand from downstream phthalic anhydride has marginally increased, bolstering sellers' confidence as some buyers engaged in fresh purchases to hedge against potential cost increases in o-xylene prices. However, purchasing activity from Asian and European markets has remained average amid unfavourable economic conditions, with limited impact on o-xylene prices. Consequently, o-xylene prices FOB Texas settled at USD 1065 per metric ton during the same period.

Looking ahead to Q2 2024, market players anticipate that o-xylene prices might continue to rise in the U.S. market, supported by increasing costs of feedstock mixed xylene. Furthermore, the decision of OPEC+ to extend voluntary oil output cuts of 2.2 million barrels per day (bpd) into the second quarter might further raise supply-side concerns for downstream manufacturing firms, including o-xylene producers. Additionally, demand for o-xylene from downstream phthalic anhydride is projected to gain momentum, driven by increased consumption in the construction sector from both domestic and international markets. Moreover, the Panama Canal Authority (PCA) will increase the number of slots available for Panamax vessels to transit the waterway beginning May 16 and will add another slot for Neopanamax vessels on June 1, based on current and predicted water levels in Gatun Lake. Consequently, it is anticipated that the supply of o-xylene might improve in the coming months.